NIO's inclusion in Hang Seng Tech Index expected to bring in $44.3 million in passive inflows, analysts say - CnEVPost

NIO's inclusion in Hang Seng Tech Index expected to bring in $44.3 million in passive inflows, analysts say

Considering NIO's average daily trading volume in Hong Kong for the past month, the inflow of funds from ETFs will last about 10.3 days, according to CICC.

NIO (NYSE: NIO, HKG: 9866) is set to be included in two major indices in Hong Kong, so what does this mean? Analysts at CICC give their take.

The electric vehicle maker will be included in the Hang Seng Composite Index as well as the Hang Seng Tech Index, effective Monday, June 13, according to a quarterly review by the Hang Seng Indexes Company Limited announced on May 20.

NIO's weighting in the Hang Seng Tech Index will be 0.52 percent and its weighting in the Hang Seng Composite Index has not been announced.

So far, the ETF fund size tracking the Hang Seng Tech Index is about $8.52 billion and the ETF fund size tracking the Hang Seng Index is about $23.85 billion, said CICC analyst Liu Gang's team in a research note released today, citing data from Bloomberg.

Based on NIO's weighting in the Hang Seng Tech Index, the company is expected to receive $44.3 million in passive inflows upon inclusion, the team said.

Considering NIO's average daily trading volume in Hong Kong for the past month, inflows from these ETFs will last about 10.3 days, according to the team.

After NIO is included in the Hang Seng Tech Index, ASM Pacific Technology Ltd will be removed to maintain the number of constituents at 30.

The number of constituents of the Hang Seng Composite Index will increase from 516 to 517 after the inclusion of NIO, which was listed in Hong Kong on March 10.

Although NIO will be included in the Hang Seng Composite Index, it cannot be included in the Mainland-Hong Kong Stock Connect at this time as its listing in Hong Kong is a secondary listing, CICC noted.

NIO's local peers XPeng Motors (NYSE: XPEV, HKG: 9868) and Li Auto (NASDAQ: LI, HKG: 2015), both of which came to Hong Kong with dual primary listings, are already included in the Mainland-Hong Kong Stock Connect mechanism.

The mechanism was launched in November 2014 to facilitate investors from both regions to buy each other's stocks.

With access to the list, investors in the Chinese mainland will be able to trade these stocks, although those with securities account assets of more than RMB 500,000 will only be eligible to participate in the mechanism.

Hong Kong stocks were generally lower in early trading today, with the Hang Seng Index down 1.39 percent and the Hang Seng Tech Index down 2.62 percent at press time. NIO was down 1.62 percent, XPeng was down 8.28 percent and Li Auto was down 4.89 percent.

NIO's inclusion in Hang Seng Tech Index expected to bring in $44.3 million in passive inflows, analysts say-CnEVPost

Phate Zhang/CnEVPost: Phate is the founder and main author of CnEVPost. He has been reporting since 2009, mainly on macroeconomics and capital markets. Contact via: [email protected]
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